1. Income Security Programs
SOCIAL DEVELOPMENT CANADA
Income Security Programs

2. Income Security Programs
SOCIAL DEVELOPMENT CANADA
Income Security Programs
Old Age Security (OAS)
Canada Pension Plan (CPP)
International Social Security Agreements

3. Retirement Income System
Canada's
Retirement Income System

4. The 3 levels of Canada’s Retirement Income System
3 Private Savings Employer Pensions
2 Canada Pension Plan Québec Pension Plan
1 Old Age Security

5. Canada’s Retirement Income System
In general, 70% of pre-retirement income is required
OAS and CPP retirement pensions are designed to replace about 40% of the pre-retirement income

6. Canada’s Retirement Income System
On average, 70% of pre-retirement income is required to maintain pre- retirement lifestyle
The OAS pension and CPP Retirement pension are designed to replace about 40% of the average pre-retirement income
Maximum OAS and CPP retirement benefits in year 2006 is about $16,000

7. Old Age Security

8. Old Age Security Sustainability
Financed from general tax revenues of the Government of Canada
OAS on solid ground - Actuarial studies
Canada’s Gross Domestic Product (GDP) and individual incomes to rise

9. Old Age Security Benefits
Old Age Security pension (OAS)
Guaranteed Income Supplement (GIS)
Allowance
Allowance for the Survivor

10. Old Age Security (OAS) Pension
Based on age, legal status, and years of residence in Canada
2 types of pension - Full and Partial
Taxable
May be subject to OAS Repayment of Benefits

11. OAS Pension Must: be 65 years of age or more;
meet the legal status and residence requirements;
apply in writing

12. OAS Pension Legal Status Requirement
Must be:
a Canadian citizen; or
a legal resident of Canada; on the day preceding the approval of your application or on the day before the day you stopped living in Canada.

13. OAS Residency Requirement
People living in Canada
Must be a Canadian citizen or a legal resident at the time your application is approved
Must have resided in Canada for at least 10 years after the age of 18

14. OAS Residency Requirements
People living outside of Canada
Must have been a Canadian citizen or a legal resident of Canada when you left Canada
Must have resided in Canada for at least 20 years after the age of 18 (

15. Full OAS Pension
Must:
have resided in Canada for at least 40 years after age 18 and before your application is approved; or
meet the 10 years residence rule; or
meet the “3 for 1” residence rule.

16. Full OAS Pension “3 for 1” Residence Rule
Example: 18 55 64 65
Need 3 years of residence
For each year of absence

17. Partial OAS Pension You do not qualify for a full OAS pension
1/40th of a full OAS pension for each full year of residence in Canada after age 18
Minimum of 10 years residence required
Once approved, a partial OAS pension will not be increased following additional years of residence in Canada

18. Portability To have the OAS pension paid outside Canada, you must:
have 20 years of residence in Canada after age 18; or
meet the 20-year residence through one of Canada’s International Agreements with another country.

19. OAS Repayment of Benefits
OAS pension higher-income pensioners
Net World Income from $62,144 to $100,914 (2006)
15% for residents, varies for non-residents
Based on previous year’s income
(continued…)

20. OAS Repayment of Benefits
Monthly deductions from OAS pension
CRA International Tax Services Office
(Canada or U.S.)

21. Guaranteed Income Supplement (GIS)
For low-income seniors
Added to the OAS pension
Based on income and marital status
Based on combined income, if the applicant has a spouse/partner
Not taxable

22. GIS Must: be in receipt of an OAS pension; reside in Canada;
apply in writing.

23. Allowance Must apply in writing
For low-income seniors who meet the eligibility conditions
Based on combined income from the previous year
Not taxable
Must apply in writing

24. Allowance Must be: between the ages of 60 and 64;
the spouse/common-law partner of a GIS recipient;
a Canadian citizen or a legal resident (same as OAS);
a resident of Canada for at least 10 years after age 18

25. Allowance for the Survivor
For low-income seniors who meet the eligibility conditions
Based on previous year’s income
Not taxable
Must apply in writing

26. Allowance for the Survivor
Must be:
between the ages of 60 and 64;
a survivor;
a Canadian citizen or legal resident (same as OAS);
a resident of Canada for at least 10 years after
age 18.

27. Allowance and Allowance for the Survivor at age 65:
At age 65, the Allowance and Allowance for the Survivor stops, must apply for OAS Pension
May also qualify for the GIS

28. Maximum Net Income Allowed
Jan to March 2006
GIS – Single $ 14,256 Table 1
GIS Married - Spouse/Partner is:
an OAS pensioner (65+) $ 18,720 Table 2
a Non-pensioner (under 60) $ 34,368 Table 3
an Allowance pensioner (60-64) $ 34,368 Table 4
Allowance $ 26,496 Table 4
Allowance for the Survivor $ 19,368 Table 5
(widow/widower 60-64)
NOT INCLUDING OLD AGE SECURITY!

29. Portability
GIS, Allowance and Allowance for the Survivor may only be paid outside of Canada for the month of your departure and for the following six months

30. Renewal
GIS, Allowance and Allowance for the Survivor must be renewed each year
They are renewed automatically if you file your income tax return prior to April 30
(continued…)

31. Canada Pension Plan

32. Canada Pension Plan Began in January 1966
Employment-based contributions
Self-supporting
Payable outside Canada
Reviewed and revised regularly
Québec has a program with similar benefits

33. CPP Investment Board
Professionally manages the CPP fund, not needed to pay benefits
Broadly subject to the same investment rules as other pension funds
Reports its investments and returns regularly
Check out website for most recent information. (
Actuarial reports built on 4.25% real rate of return (return over and above inflation) for CPPIB
READ INTERNET REPORTS BEFORE DISCUSSING OUR FINANCIAL SITUATION!
DO NOT need investments to pay benefits for about 18 years!

34. Contributions for Year 2006
Maximum Contributory Earnings:
$42,100 (YMPE) - $3,500 (YBE) = $38,600
Employee Rate: 4.95%
Amount: $1,831.50
Employer Rate: 4.95%
Self-Employed Rate: 9.9%
Amount: $3,663

35. Contribution Rates Schedule
Year Employee Employer Self-Employed
% 3.9% 7.8%
% 4.3% 8.6%
% 4.7% 9.4%
4.95% 4.95% 9.9%
% 4.95% 9.9%
(Contribution Rate will now be maintained at this maximum rate of 9.9%)

36. Adjusted Earnings
Protects pension by taking growth of wages into account

37. Contributory Period Starts (later of): January 1966; or
month after your 18th birthday.

38. Contributory Period Ends (first of):
month before your Retirement pension starts; or
month you reach age 70; or
month you die; or
when eligible for Disability benefits.

39. Contributory Period Example
Starts (later of):
January 1966; or
age 18
Ends (first of):
retirement; or
age 70; or
death
Age 60
Age 65
Age 70
Start
(Flexible start date option)

40. Canada Pension Plan Statement of Contributions Sent periodically

41. Drop-Out Provisions Periods of CPP Disability
Periods during which children were raised up to age 7
Plus 65 years of age
15% of the lowest earning years in your contributory period (calculated last on remaining years)

42. Drop-Out Provisions Example:
Year 2005 Age 65
Contributory Period 40 Years 23 years after drop-outs
(approximate only as calculation actually uses months)
1. Periods of disability (1985 to 1990) 6 Years
2. Raising children (1968 to 1974) 7 Years
3. 15% ( = 26 years x 15%) 4 Years

43. Child Rearing Drop-Out
Must have:
a child born after December 31, 1958;
left or reduced work to care for the child while under the age of 7;
received the Family Allowances; or
been eligible for the Child Tax Benefit.
Must apply in writing

44. Credit Splitting
“Credits” may be divided upon divorce, legal annulment or separation of spouses or common-law partners
“Credits” may create eligibility or increase/ decrease entitlement to CPP benefits
Applicant’s ex-spouse/ ex-partner is notified of the request in writing

45. Canada Pension Plan Benefits
Retirement pension
Disability benefit
Disabled Contributor Child’s benefit
Survivor benefits
Death benefit
Survivor’s benefit
Surviving Child’s benefit

46. Retirement Pension May start receiving the Retirement pension:
 between age 60 and 65;
 at age 65;
 between age 65 and 70.
Must have made at least one valid contribution
Must apply in writing
Taxable

47. Flexible Retirement Pension
Between 60 and 65:
Amount decreased by 0.5% for each month under age 65
Maximum decrease of 30%
No re-adjustment of pension amount at age 65
(continued…)

48. Flexible Retirement Pension
Between 60 and 65
No retroactivity
Stop or earn up to a maximum amount for period of time
Stops contributing to CPP/QPP

49. Substantially Ceased Working Cessation Test For Early Retirement
Earnings from employment must be below the maximum monthly CPP Retirement pension
Only for the month before the Retirement pension starts and for the month the pension starts being paid
Max. of $ for each month (2006)

50. Flexible Retirement Pension
Between 65 and 70
Increased by 0.5% for each month over age 65
Maximum increase of 30%
Retroactivity of maximum of 11 months prior to application (back to age 65 only)
Cannot contribute after age 70

51. Sharing Your Retirement Pension
Sharing your Retirement pension with your spouse or common-law partner.

52. Canada Pension Plan Disability Benefit
Number of beneficiaries
(2002/2003): ,000
Max. monthly basic benefit (2006): $1,031.05
Total expenditure
(2002/2003): $ 2.8 B

53. Disability Benefit Under age 65
Paid contributions for the minimum qualifying period
Disability both severe and prolonged
Must apply in writing

54. Minimum Qualifying Period
Applicants disabled after January 1, 1998
4 of last 6 years in the contributory period
4 years, if there is less than 6 years in the contributory period
(continued…)

55. Minimum Qualifying Period
Applicants disabled after January 1, 1998
Earnings must be at least 10% of YMPE (Disability Basic Exemption - DBE) rounded down to nearest $100
YMPE for 2006 is $42,100
DBE for 2005 is $4,200

56. Minimum Qualifying Period
Applicants considered disabled before 1998
5 of last 10 years; or
5 years, if less than 10 years in the contributory period; or
2 of last 3 years; or
2 years, if only 2 years in the contributory period.

57. Disability Benefit Severe and Prolonged Severe:
condition prevents from doing any type of work on a regular basis.
Prolonged:
condition is long term or may result in death.

58. Disability Benefit Eligibility Provisions for Late Applicants
Protects eligible applicants who are late applying
Must meet the minimum qualifying period at time considered disabled
Up to 12 months retroactive payments

59. Disability Benefit Vocational Rehabilitation
Vocational Rehabilitation Program is designed to help recipients of CPP Disability benefits return to work
Started in 1995
Voluntary

60. Disability Benefit Vocational Rehabilitation
Motivated to return to work
Doctor agrees
Signs a consent to participate

61. Disability Benefit at Age 65
At age 65, the Disability benefit is replaced by the CPP Retirement pension

62. Canada Pension Plan
Survivor Benefits

63. Survivor Benefits Minimum Contribution Required
Deceased contributor must have paid into CPP for 1/3 of their contributory period or
10 years (whichever is less)
and
have a minimum of 3 years of contributions

64. Canada Pension Plan Death Benefit Max. lump sum benefit (2006): $2,500
Total expenditure (2002/2003): $234 M

65. Death Benefit Paid to the representative of the estate
If there is no estate, the benefit is paid to:
1) person or agency responsible for the funeral expenses;
2) survivor (spouse or common-law partner);
3) next-of-kin.

66. Canada Pension Plan Survivor’s Benefit Number of beneficiaries
(2002/ 2003): 907,000
Max. monthly benefit (2006): $ (-65)
$ (+65)
Total expenditure (2002/2003): $3.1 B

67. Survivor’s Benefit Paid to the survivor of the deceased contributor
Survivor must be over age 35, or have a dependent child, or be disabled
Benefit continues upon change in marital status
Up to 12 months retroactive payments
Taxable
Must apply in writing

68. Canada Pension Plan Combined Benefits Combined benefits
Retirement pension or Disability benefit
Survivor’s benefit
Combined benefits

69. Canada Pension Plan Child’s Benefit
Number of beneficiaries (2002/2003):
Disabled Contributor Child’s benefit 90,000
Surviving Child’s benefit 86,000
Flat-rate monthly benefit (2004): $200.47
Total expenditure (2002/2003): 461 M

70. Child’s Benefit Dependent child of a deceased or disabled contributor
Maximum of two benefits may be paid per child
Taxable
Must apply in writing

71. Full Time Attendance at School
Acceptable educational institution
Benefits paid during vacation period
Must confirm attendance each year/semester
May be deemed in school, if absence is due to illness

72. Social Security Agreements
International
Social Security Agreements

73. International Agreements
Antigua and Barbuda
Australia
Austria
Barbados
Belgium
Chile
Croatia
Cyprus
Czech Republic
Denmark
Dominica
Finland
France
Germany
Greece
Grenada
Hungary
Iceland
Ireland
Israel ●
Italy
Jamaica
Jersey and Guernsey
Korea
Luxembourg
Malta
Mexico
Morocco ×
Netherlands
New Zealand
Norway
Japan
× Not yet in force
Philippines
Portugal
St. Kitts and Nevis
Saint Lucia
Saint Vincent and the
Grenadines
Slovakia
Slovenia
Spain
Sweden
Switzerland
Trinidad and Tobago
Turkey ×
United Kingdom ●
United States
Uruguay
● Limited agreement

74. Appeals
Reconsideration
Review Tribunal
Pension Appeals Board

75. Direct Deposit Bank, Credit Union or Financial Institution
81% of ISP clients receive their monthly payment through direct deposit

76. Start Planning Today Things to do now! Social Insurance Number
Birth certificate
Marriage certificate
Citizenship certificate
Immigration/legal status
Passport
Will
Statement of Contributions

77. How to reach us ? www.sdc-dsc.gc.ca/isp 1 800 277-9914 (English)
(French)
(TDD/TTY device)